Question
Two music companies reported the following in their financial statements: Urban Youth Sound Jonx 2018 2017 2018 2017 Net income $ 26,900 $ 23,702 $
Two music companies reported the following in their financial statements:
| Urban Youth | Sound Jonx | ||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Net income | $ | 26,900 | $ | 23,702 | $ | 43,500 | $ | 36,139 | |||||
| Total stockholders' equity | 327,101 | 240,399 | 456,302 | 461,198 | |||||||||
| Earnings per share | 1.10 | 1.00 | 0.95 | 0.85 | |||||||||
| Stock price when annual results reported | 17.35 | 15.50 | 13.15 | 11.45 | |||||||||
Required:
1-a. Compute the 2018 ROE for each company.
1-b. Which company appears to generate greater returns on stockholders equity in 2018?
2-a. Compute the 2018 P/E ratio for each company.
2-b. Which company investors appear to value more?
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Auditing A Risk Based-Approach
Authors: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
11th Edition
1337619455, 1337619450, 9781337670203 , 978-1337619455
